The year passes so quickly! It is almost December.
With the end of the year fast approaching and several
tax changes this year, you may want to take a few minutes
to check your tax withholding.
If your withholding is too high, you are giving the government an interest free loan.If you had a significant change in your life this year, like marriage, divorce, birth or adoption of a child, purchase or sale of a home, or retirement, you should examine your withholding. Your tax bracket, credits, and income tend to change with major life events.
If your withholding is too low, you will owe tax at the end of the year, and you may even have to pay a penalty. Generally, a penalty will apply if your withholding and estimated tax payments total less than 90 percent of your current year’s tax liability and less than 100 percent of the previous year's tax.If you have more than one job, your spouse works, you have income not subject to withholding, such as rent, interest, dividends or capital gains, or you owe other taxes like self-employment or household employment taxes, it is very possible that you are not having enough taxes withheld.
You still have time to make proactive changes to your withholding to avoid surprises next year! If you received a large refund or owed an amount that put a strain on your finances, you should take this chance to examine your withholding.Adjust the amount withheld from your paycheck by giving your employer a new Form W-4. Or revise the estimated taxes you pay with Form 1040-ES.
So go ahead and get on track with your withholding. It makes good financial sense to bring the tax you pay closer to the tax you owe.
| Useful Tools at the IRS Website: |
